Appraisal

In depth

An appraisal is a formal valuation produced by a state-licensed or certified appraiser. The Uniform Residential Appraisal Report (URAR) is the standard form for residential properties. Approaches include sales comparison, cost, and income, with sales comparison dominating residential appraisals. Misconception: an appraisal is not a guarantee of value; it is the appraiser's opinion based on available data. Practically, lenders require appraisals on most mortgage transactions to confirm the loan-to-value. Cash and seller-financed buyers often skip the appraisal but obtain a CMA or BPO. Low appraisals can derail traditional financing but rarely affect seller-financed deals. FSBO sellers may pay for a pre-listing appraisal ($400 to $700) to support their asking price. Appraisals are subject to USPAP standards.